Coforge to acquire AI-native firm Encora for $2.35 billion in largest Indian IT services deal

India's Coforge to acquire Advent, Warburg-backed Encora in $2.35 billion deal

Dec 26 (Reuters) - Indian IT services provider Coforge said on Friday it would acquire U.S.-based AI firm Encora from private equity groups Advent International and Warburg Pincus at an enterprise value of $2.35 billion. The acquisition will give Coforge a stronger foothold in the AI-led services segment, the company said, adding that the business is likely to deliver $2 billion in revenue for the fiscal year to March 2027. Coforge said it will fund the equity value of the deal, worth $1.89 billion, through the issue of preference shares, which will give Encora shareholders a 20% stake in the Indian firm. Reporting by Nandan Mandayam in Bengaluru; Editing by Sonia Cheema Our Standards: The Thomson Reuters Trust Principles., opens new tab

Coforge to acquire Encora in $2.35B technology services deal - SiliconANGLE

Information technology services provider Coforge Ltd. today announced plans to acquire rival Encora Digital LLC for $2.35 billion. Coforge, which is listed on two stock exchanges in India, will finance the deal with shares. It will take out a bridge loan worth up to $550 million to refinance the debt on Encora's balance sheet. Coforge is buying the company from a consortium that includes private equity firm Advent International, Warburg Pincus and other investors. New Jersey-based Encora provides professional services that help enterprises enhance their technology infrastructure. Many of its services focus on artificial intelligence use cases. The company can help clients fine-tune large language models using internal datasets, turn those models into agents and connect the agents to their other applications. Encora also competes in other parts of the technology services market. Companies can entrust it with tasks such as fixing quality and regulatory compliance issues in their business datasets. Additionally, Encora has a design team that specializes in creating user interfaces. The company sells its professional services alongside a software platform called AIVA. According to Encora, the platform automates some of the manual work involved in managing AI agents. AIVA also ships with a library of pre-packaged agents that can automate tasks such as debugging code. Coforge offers an AI platform of its own called Quasar. According to the company, the platform provides more than 100 application programming interfaces that developers can mix and match to build AI tools. There are also governance features designed to ensure that Quasar-powered workloads operate reliably. The platform complements the IT services that account for most of Coforge's revenue. The company helps customers develop AI applications, roll out productivity tools such as Microsoft 365 to their employees and make other technology upgrades. Beyond the IT market, Coforge helps organizations with non-technical tasks such as issuing mortgages and booking patient appointments. "The Encora acquisition is a defining moment for our organization," said Coforge Chief Executive Officer Sudhir Singh. "It establishes a scaled AI-led engineering capability moat for the firm underpinned by capabilities to help create enterprise data cores and cloud foundations purpose built for AI." Coforge expects the acquisition to boost its North America business' annual revenue by 50% to about $1.4 billion. Additionally, it stands to gain 11 large customers who spend more than $10 million per year on Encora services. The combined company will operate with an EBIT, or earnings before interest and taxes, margin of 19%.

Will Encora acquisition cement Coforge's AI leadership in healthcare and hi-tech?

ET Intelligence Group: The acquisition of California based Encora will strengthen Coforge's artificial intelligence (AI) capabilities in the healthcare and hi-tech verticals while increasing its presence in the US market over the long term. In the medium term, merger of the two entities will be a major challenge with the focus on talent retention and identifying synergies. Coforge has reported a strong business momentum over the past few years through organic and inorganic routes- its revenue grew at a compounded annual rate (CAGR) of 27% and nearly 24% over the past three and five years respectively. Encora's acquisition will enable Coforge to deliver AI led IT engineering, data and cloud solutions, which are expected to be the next growth drivers for software service providers. Therefore, Encora is a strategic acquisition for Coforge in a bid to stay future ready. Encora's revenue is expected to grow at a three-year CAGR of 13% to $600 billion (around ₹5,340 crore) in FY26. Coforge reported ₹7,674 crore of revenue in the first half of FY26, implying an annualised top line of ₹15,348 crore. The combined entity therefore may have an estimated revenue of ₹20,688 crore for FY26. That will likely allow it to replace Mphasis to become India's seventh largest software exporter. The deal implies Encora's enterprise value (EV) to be four times FY26 estimated revenue. It is at a premium given the typical EV/sales of 1.5-3 in the sector, reflecting the high growth potential of the combined entity, which is expected to report $2.5 billion in revenue by FY27 compared with $1.4 billion revenue reported by Coforge in FY25. On Friday, Coforge announced plans to buy 100% stake in Encora for a consideration of $2.35 billion from existing shareholders, Advent International and Warburg Pincus. It is the largest acquisition in the Indian IT services sector in terms of the deal value, surpassing the earlier major deals including the purchase of select IBM products by HCL Technologies for $1.8 billion in December 2018 and Wipro's $1.45 billion acquisition of Capco in March 2021. Coforge will pay $1.89 billion in the form of share swap thereby giving over 21% stake to Encora's investors. The balance amount will be raised through either an institutional placement or a loan to repay Encora's debt. Coforge expects the transaction to be earnings accretive given that Encora runs a profitable business.

Coforge to acquire US-based Encora in $2.35 billion deal - The Economic Times

IT services ⁠provider Coforge said on Friday it would acquire U.S.-based AI firm Encora from private equity groups Advent International and Warburg Pincus at an enterprise value of $2.35 billion. The acquisition will give Coforge a stronger foothold in the AI-led services segment, the company said, adding that the business is likely to deliver $2 billion in revenue for the fiscal year to March 2027. Coforge said it will fund the equity value of the ⁠deal, worth $1.89 billion, ⁠through the issue of preference shares, which will give Encora shareholders a 20% stake in the Indian firm.

Coforge to acquire AI-native firm Encora for $2.35 billion By Investing.com

Investing.com -- Coforge has signed definitive agreements to acquire Encora, an AI-native firm from Silicon Valley, for an enterprise value of $2.35 billion, the company announced Friday. The acquisition will create a $2.5 billion tech services company with AI-led engineering, data, and cloud services expected to generate $2 billion in revenue by FY27. The transaction is subject to customary closing conditions and regulatory approvals. Encora provides AI-driven engineering services to Fortune 1000 enterprises and digital-native companies, operating at the intersection of AI, Cloud, and Data. The firm has developed one of the industry's first composable agentic AI platforms called AIVATM and maintains partnerships with AWS, Microsoft, Google, and Snowflake. The deal will be funded through a preferential allotment of equity shares representing an equity value of approximately $1.89 billion. Upon completion, Encora shareholders will hold approximately 20% of Coforge's expanded share capital. Encora's projected revenue for FY26 is $600 million with an adjusted EBITDA margin of about 19%. The combined business is expected to operate at an EBIT margin of 14%, with the acquisition becoming EPS accretive in FY27. The acquisition will significantly strengthen Coforge's position in several areas. The company's AI-led product engineering business is projected to reach $1.25 billion, while cloud services and data engineering are expected to grow to approximately $500 million and $250 million respectively. Additionally, Coforge's Hi-Tech and Healthcare industry verticals will immediately reach material scale post-acquisition, each operating at an annualized revenue run rate exceeding $170 million. The deal will also expand Coforge's near-shore delivery capability in Latin America, adding 3,100+ engineering and AI specialists serving US clients. "The Encora acquisition is a defining moment for our organization. It establishes a scaled AI-led engineering capability moat for the firm underpinned by capabilities to help create enterprise data cores and cloud foundations purpose built for AI," said Sudhir Singh, Chief Executive Officer and Executive Director of Coforge Ltd. Shweta Jalan, Managing Partner at Advent, which is selling its stake in Encora along with Warburg Pincus and other minority shareholders, expressed satisfaction with the deal: "We are delighted that Encora has found the right home and is joining forces with Coforge." BDA Partners served as the exclusive investment banker on this transaction, with JSA and Khaitan & Co. representing Coforge and Encora respectively. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

India's Coforge to acquire Encora in $2.35 billion deal to boost AI offerings

Dec 26 (Reuters) - Indian IT services provider Coforge said on Friday it would acquire artificial intelligence firm Encora at an enterprise value of $2.35 billion to boost its in-house AI capabilities and expand its presence in the U.S. and Latin America. Indian IT firms are exploring funding projects related to AI technology, potentially opening up a significant new revenue stream as the buzz around the field grows. Encora, backed by Advent International and Warburg Pincus, offers AI solutions for product, cloud and data engineering, with Coforge estimating $2 billion in annual revenues by March 2027. The combined entity is expected to operate at a margin of 14% before interest and taxes, with the acquisition anticipated to be EPS accretive by fiscal 2027. The revenue coming in (from the merger) would help Coforge leapfrog Persistent, Mphasis and Hexaware to become India's seventh largest IT firm, said Pareekh Jain, founder of tech advisory firm EIIR Trend. Coforge will fund the $1.89 billion equity value of the deal through the issue of preference shares at 1,815.91 rupees apiece, a 14.5% premium to Friday's close, while Encora shareholders will receive a 20% stake in the combined firm. It plans to pay off the California-based company's debt through a fundraising of up to $550 million, either through a bridge loan or a qualified institutional placement of Coforge shares. The Indian firm, which derives 58% of its revenue from North and South America, will strengthen its presence in the West and Midwest U.S. through the acquisition, and gain access to Encora's workforce of approximately 3,100 employees in Latin America. The company clocked revenues of 120.51 billion rupees ($1.34 billion) in fiscal 2025, up 32% from the previous year, while Encora registered a turnover of $516 million. Coforge said the deal is expected to close in four to six months, and BDA Partners served as the investment banker for the transaction. ($1 = 89.9060 Indian rupees) (Reporting by Nandan Mandayam in Bengaluru; Editing by Sonia Cheema and Vijay Kishore)

India's Coforge to acquire Advent, Warburg-backed Encora in $2.35 billion deal

Dec 26 (Reuters) - Indian IT services provider Coforge said on Friday it would acquire U.S.-based AI firm Encora from private equity groups Advent International and Warburg Pincus at an enterprise value of $2.35 billion. The acquisition will give Coforge a stronger foothold in the AI-led services segment, the company said, adding that the business is likely to deliver $2 billion in revenue for the fiscal year to March 2027. Coforge said it will fund the equity value of the deal, worth $1.89 billion, through the issue of preference shares, which will give Encora shareholders a 20% stake in the Indian firm. (Reporting by Nandan Mandayam in Bengaluru; Editing by Sonia Cheema)